Pension Bomb About to Hit New Jersey
As AWF has previously reported, pension plans for public employees, particularly teachers, are growing liabilities nationwide. In an economy where many families are being forced to tighten their belts, states are bleeding money due these ill-funded defined benefit plans. Of these, one of the worst cases is New Jersey.
Governor Chris Christie has spoken out frequently in support of a switch to standard 401(k) type policies, whereby employees would pay into their own retirement funds. If a change is made, however, it has to come soon. With New Jersey pensions underfunded by an estimated $46 billion (a 30% increase in a single year), budget crisis looms large. Reform is made difficult by a Democrat-controlled state legislature, which has been digging in its heels in response to Christie's cost-cutting proposals.
The Democrats should be more facilitating, because the numbers are on the Governor's side. In recent polls taken by Monmouth University, public oppinion favors Christie's agenda and decries the status quo. 61% of respondents supported having all newly hired public employees use a 401(k) plan rather than recieve a set pension upon retirement. Again, 61% percent were against the state offering higher employment benefits than available in the private sector. In addition, only 8% believes that New Jersey's pension system is being managed wisely, with a whopping 78% claiming that costs are out of control.
Overspending, followed by overtaxing, is a vicious cycle. The people of New Jersey need to replace their lawmakers with people willing to cut bloated public pensions and restore the state's budget. New Jersey legislators need to take a hard look at their state's financial woes and start cooperating with Gov. Christie before they're running an east coast version of California.
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